Giovanni Tonutti, Policy in Practice, presented his work on Using benefits data to assess the impact of welfare reform in London at the International Conference for Administrative Data Research, Queens University, Belfast on Friday 22 June 2018. This conference is aimed at researchers who use administrative data to better understand populations and societies. His presentation falls under the conference theme of The World of Work which focusses on the labour market experience of those in, and out, of work. For more information visit www.policyinpractice.co.uk, email hello@policyinpractice.co.uk or call 0330 088 9242.

1. Policy in Practice Using benefits data to
assess the impact of
welfare reform in London
Giovanni Tonutti

2. Outline
1. Introduction to Policy in Practice
2. Welfare reform in London
3. Findings
a) Benefit Cap: what effects on employment outcomes?
b) Self-employment and Universal Credit
4. Conclusion

3. We make the welfare system
simple to understand, so that
people can make the decisions
that are right for them
We help people toward
independence by making
the welfare system simple to
understand.

4. www.policyinpractice.co.uk
Policy
national impact
Analytics
local impact
Benefit
Calculator
individual impact

5. Low-income Londoners and Welfare
Reform

6. Welfare Reform
• Ongoing and unprecedented reform
process led by the DWP during the last 3
parliamentary terms.
• Objectives:
• Simplify the benefit system
(Universal Credit)
• Reduce costs (Benefit Cap)
• Improve work incentives
(Universal Credit, Benefit Cap)

7. Gap in the literature
Most analysis on welfare reform is static (survey data, typically FRS)
and backward-looking.
Our research questions:
1. What’s the impact of the benefit cap on employment outcomes?
[behavioural responses]
2. How is Universal Credit likely to affect self-employed households
on low-income? [forecasting]

8. The impact of the benefit cap in
London

9. 8,828 households affected in July 2017
• A cap on amount of benefits a family
can receive (from November 2016,
£23,000 a year for families with
children in London)
• Exemption granted for those
households working a certain threshold
of hours.
• Average reduction in their housing
benefit is £60.07 per week
• 18,362 children affected
• 61.7% are single parents

10. Since February: -23% in caseload

11. The dynamic effects

12. Has the benefit cap improved the
employment outcomes of affected
households?

13. Two sample groups
Sampling technique:
1. Treatment group: all households with income from benefit above the
£23,000 threshold as of April 2016.
2. Control group: all households with income from benefit close to the benefit
cap threshold.
• Exempted households excluded from the cohort
Analysis:
• DIF in DIF of the employment outcomes across the two groups in the
months before and after the lowering of the cap

14. Higher movement into work
• Households subject to the
benefit cap showed a 3.5 pp
higher change in employment
rates than families in the
control group
• The analysis fails to control
for the additional support from
local authorities received by
households capped

15. Fall in living standards

16. Universal Credit and self-employed
households

17. 10% of working age households on low income are self-
employed
• Outer London boroughs
see highest rate of low-
income self-employment
• 54.9 % of self-employed
households are private
renters
• Average monthly
earnings £672.47 vs
£840.79 of other
households in
employment

18. Increasing divergence between employed &
self-employed earnings
Average % change
in earnings
↑ 7.9%
↑ 4.3%

19. …rise in wages arw more than offset by
increasing rents

20. Self-employment & UC: Minimum Income Floor
• An assumed level of earnings for self-
employed people in establishing
benefit entitlements
• If actual self-employed earnings fall
below this, UC calculated assuming
this amount is being earned
• Applies after 12 months of self-
employment
Borough UC roll out
Southwark Applicable
H&F Applicable
Enfield Applicable
Tower Hamlets Applicable
Sutton Applicable
Croydon Applicable
Lambeth Dec-17
B&D Mar-18
Ealing Mar-18
Waltham Forest May-18
Barnet May-18
Islington Jun-18
Harrow Jul-18
Haringey Oct-18
Hackney Oct-18
Greenwich Oct-18
Brent Nov-18
K&C Dec-18
Camden Dec-18

21. Average self-employed household faces a £844.67/month
gap between earnings and MIF
Over 90% face a shortfall
On average, an extra 26 hours/week at NMW
needed to overcome this shortfall.
78.2% of those
facing a shortfall
have been self-
employed for 12
months. MIF will
apply immediately

22. £344 p/m worse off under UC
£2,233
• Self-employed among
the worst affected
group as UC rollout
• Awareness among
claimants?
Research to focus on choices self-employed households on low-income make. Are
they entrepreneurs or adapting to new labour structures (i.e gig economy,
freelancing)?

23. Conclusions
• Positive impact of the benefit cap on employment outcomes. Also as result
of LAs’ support to residents affected. On the other hand, households for
whom employment is not an option faced a worsening in living standards.
• Self-employment as a popular option for low-income families in London.
Increase in income not keeping up with increase in living costs and rent.
With UC, the support available to this group will be significantly reduced.
• Admin data holds a huge potential in driving operational decisions,
particularly relevant for local welfare providers (local authorities, charities
and other third sector organisations) .

24. Next steps..
• Final phase of findings in July 2018
• An interactive public dashboard
• Project has secured funding for an
additional 18 months
• Scrapping the surface
• Homelessness key issue in London
– can predictive analytics be the
key?

25. 252525
Thank you
Giovanni Tonutti
giovanni@policyinpractice.co.uk